Almost four in five UK businesses are set to cut back on pay, bonuses and even Christmas parties this year in order to limit costs, according to new research published by the Institute of Directors (IoD).
The IoD Policy Voice survey found that more than a quarter of employers (27%) said they had decreased levels of staff bonuses, pay awards and/or benefits, while the same number revealed they had reduced expenditure on staff entertainment – including Christmas parties.
Of 1,114 respondents who were asked had their organisation made changes to business practice in response to the current economic situation, only 22% reported they had not made cut backs of any kind.
Graeme Leach, chief economist and director of policy at the IoD, believes this is just the start of longer-term cost control. “Companies are starting to feel the ripple effect from the downturn and these cut-backs are signaling to staff that the glory days are over. In order to avoid making redundancies bonuses and pay will start to be eroded but if handled well, it will manage employee expectation during the tough times. If handled badly, [the cut-back] will obviously have a negative impact on morale and motivation,” he said.
Levels of energy and stationary wastage (45%) was the most common cut back, followed closely by staff recruitment (40%).